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QNO Purpose of Internal Control Old Course -- (M19R)
ICS.01 Bhaskar CNO- SA315-P2.020
Explain the purpose of Internal Control.
Answer ➢ Purpose of Internal Control:
Internal control is designed, implemented and maintained to address identified business risks that
threaten the achievement of any of the entity’s objectives that concern-
Safeguarding of assets.
The effectiveness and efficiency of its operations;
Its compliance with applicable laws and regulations; and
The reliability of the entity’s financial reporting;

QNO Internal Controls Definition ,Objectives & Purpose Old Course -- (M16R/M20R/SM20/SM21)
ICS.02 Bhaskar CNO- SA315-P2.020 New Course -- (SM25)
Explain the concept of Internal Control. Also state the objectives of Internal Control.
OR
"Internal control over safeguarding of assets against unauthorised acquisition, use, or disposition may
include controls relating to both financial reporting and operations objectives. Explain stating clearly the
objectives of Internal Control."
Answer ➢ Internal Control:
As per SA-315, “Identifying and Assessing the Risk of Material Misstatement Through Understanding the
Entity and its Environment” the internal control may be defined as “the process designed, implemented
and maintained by those charged with governance, management and other personnel to provide
reasonable assurance about the achievement of an entity’s objectives with regard to reliability of
financial reporting, effectiveness and efficiency of operations, safeguarding of assets, and compliance
with applicable laws and regulations. The term “controls” refers to any aspects of one or more of the
components of internal control.”

➢ Objectives of Internal Control:
Assets
• assets are safeguarded from unauthorized access, use or disposition; and
• the recorded assets are compared with the existing assets at reasonable intervals
and appropriate action is taken with regard to any differences.

Operations
• transactions are executed in accordance with managements general or specific
authorization;
• Transactions are efficient & effective

Law Compliance
• Rules & Regulations are followed while executing transactions

Financial Reporting
• all transactions are promptly recorded in the correct amount in the appropriate
accounts and in the accounting period in which executed so as to permit preparation
of financial information within a framework of recognized accounting policies and
practices and relevant statutory requirements, if any, and to maintain accountability
for assets;

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